FDIC’s Gruenberg discusses deposit insurance systems between the U.S. and EU | Orrick, Herrington & Sutcliffe LLP

On October 29, FDIC Chairman Martin J. Gruenberg delivered a speech at Goethe University to discuss the experiences with deposit insurance and bank resolution in the EU and U.S. Gruenberg emphasized the benefits of a federal system of deposit insurance and suggested that a unified deposit insurance system within the EU could enhance financial stability by addressing differences in backstop capabilities between EU member nations.

He highlighted the EU’s progress in establishing a single banking market which created public confidence in the stabilizing role of deposit insurance in the banking system and ensured a streamlined process for handling bank failures within a unified system. The banking union and the European Commission’s 2023 crisis management and deposit insurance (CMDI) package aimed to support the EU’s bank crisis management and deposit insurance framework for small- and medium-sized banks. Gruenberg compared this with the development of the FDIC’s resolution process since it was established.